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I'm trying to decide if I should contribute the maximum to my unmatched 401k or if I should put money into an IRA. I put together a model where I would take 12% of my income ($15,000) and invest it into a 401K every year for 20 years at a 10% annual gain (the best I could hope for based on the mutual funds offered). After 20 years I would net $672,000. However, if I took $7,500 ($15,000 after 50% tax) and invested it every year for 20 years into a Roth IRA with Foolish Four returns of 24%, I would net $2,830,690. I just started looking at IRAs today, so I could be missing something. Am I oversimplifying? Any thoughts?
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